(Original post by Sternumator)
Depends on the type of option and how you use them. You can use them to limit exposure or to increase it. By using options you can create an position you want.

Hmmm, I studied this stuff quite a while back, around 2014 I guess, so my memory is a bit rusty lol. Yeah you can create anything basically, in finance they are usually referred to as "exotics", so like a future with an option on it or an option with an upper and lower strike price etc.

But still the main thing is the stock (what we refer to as the underlying), if the underlying screws up the option has no hope. In finance you don't really need to mess with these exotic derivatives, they don't serve a great purpose if your underlying is terrible.

What you need to do is pick stocks and bonds well, the rest just takes care of itself.

(Original post by Sternumator)
It's a mugs game. No different to gambling on sports. If anything I would say it's easier to win on sports because there are fewer full time analysts doing it.

No it is not, sports gambling is a win/lose wager, and with horse racing you do not even get to keep some of the manure.

The stockmarket (excepting punts in the short term ) is a long play.

My criteria (except for the odd small punt)

1. Buy stocks you will be happy to hold for a minimum five years, you may not intend a five year hold but buy those that if the price moves against you will not make you uncomfortable. The stock paying a dividend helps, but high yields are not the be all and end all, a very high yield can be telling you something. Do look at dividend cover and beware companies that every year have vast exceptionals that significantly impact difference between basic EPS and adjusted EPS, if every year they are miles apart do much more digging.

2. Remember that the norm is you never lose all your money, unlike betting, usually you can exit with some of your stake returned. If you use stop losses you can mitigate the downside but you need a wide margin re volatile stocks to avoid being constantly auto sold.

3.Moving your stop loss up if the price has increased is a good way to protect some of your gains.

4. Never fall in love with a share, it is really easy to do, if you do fall in love not penny/aim stocks, they can break your heart. I have a running love affair with Shell but it is a big beast with a long dividend record, I probably always hold some as a core and buy extra if I think it is undervalued (the minus 2% this morning was such an event, it was in profit by close)

5. Spread risk, very tricky if you have limited stake, you do not want all eggs in one basket. If very restricted re money/transaction costs will be an issue, consider Investment Trusts as slow burners. I do not like unit trusts but that is possibly in the main prejudice (except re property, they are dangerous with illiquid assets, as we are currently seeing) ITs also good way to get exposure into foreign markets etc, I use them for this purpose.

6.Be careful in current market, it is very difficult to predict with the current macroeconomics/ political events (banks, property, exchange risk, contagion issues etc abound) There are very few 100% certs re economies but you do need to keep an eye on macroeconomic news and formulate what might happen if x happens-in my case, despite some study at university, I still misread market signals, so caveat emptor; remember markets can be irrational for quite a long time. (dotcom boom)

7. Never believe that because a share was once priced at X it can retest that figure if it has fallen, a past price merely tells you that at some time some people valued it at X, nothing more.

8. Understanding accounts is imho important, but I would say that, accountancy is how I earn a living. But it is helpful to be able to read published accounts (forget the five line summaries on your brokers site, delve deep)

9. Always be prepared to cut your losses, see 4 above. Be careful of falling knives, if the market has priced downward it may have good reason, ensure you understand why it has taken the view it has.

10. Despite fundamentals, P/E, Gordon Models, etc, always remember that the term profit is a vague concept, how/when an entity decides it has made a profit whilst subject to accounting regulation, is not exact. So when you look at the company with reported earnings and profits over 3-5 years dig into its cashflows, these are far more difficult to massage.

There are a loads of other things to look for, study, read, delve into accounts, look at RNS stories, use bulletin boards but with great care, watch and observe to decide who seems to talk sense and who may have other motives, watching posters from a distance over time can educate your senses before spending any money.

Also maybe concentrate on particular companies or sectors, get to understand particular markets; analysts cover a niche for good reason, it is hard to cover everything, so you ought to do likewise.

Re my own credentials, I am old (a parent) have been investing for over 20 years, the last 8 with serious money (one of my pensions now a SIPP)

You will make mistakes, you will maybe get a ten bagger (I have had one, 3.5p went to 75p, I started selling between about 35p to 45p, so far too early with hindsight, but felt better when it fell back to 3p later-Beowulf-do not touch it, not for widows and orphans)

(Original post by DJKL)
No it is not, sports gambling is a win/lose wager, and with horse racing you do not even get to keep some of the manure.

The stockmarket (excepting punts in the short term ) is a long play.

My criteria (except for the odd small punt)

1. Buy stocks you will be happy to hold for a minimum five years, you may not intend a five year hold but buy those that if the price moves against you will not make you uncomfortable. The stock paying a dividend helps, but high yields are not the be all and end all, a very high yield can be telling you something. Do look at dividend cover and beware companies that every year have vast exceptionals that significantly impact difference between basic EPS and adjusted EPS, if every year they are miles apart do much more digging.

2. Remember that the norm is you never lose all your money, unlike betting, usually you can exit with some of your stake returned. If you use stop losses you can mitigate the downside but you need a wide margin re volatile stocks to avoid being constantly auto sold.

3.Moving your stop loss up if the price has increased is a good way to protect some of your gains.

4. Never fall in love with a share, it is really easy to do, if you do fall in love not penny/aim stocks, they can break your heart. I have a running love affair with Shell but it is a big beast with a long dividend record, I probably always hold some as a core and buy extra if I think it is undervalued (the minus 2% this morning was such an event, it was in profit by close)

5. Spread risk, very tricky if you have limited stake, you do not want all eggs in one basket. If very restricted re money/transaction costs will be an issue, consider Investment Trusts as slow burners. I do not like unit trusts but that is possibly in the main prejudice (except re property, they are dangerous with illiquid assets, as we are currently seeing) ITs also good way to get exposure into foreign markets etc, I use them for this purpose.

6.Be careful in current market, it is very difficult to predict with the current macroeconomics/ political events (banks, property, exchange risk, contagion issues etc abound) There are very few 100% certs re economies but you do need to keep an eye on macroeconomic news and formulate what might happen if x happens-in my case, despite some study at university, I still misread market signals, so caveat emptor; remember markets can be irrational for quite a long time. (dotcom boom)

7. Never believe that because a share was once priced at X it can retest that figure if it has fallen, a past price merely tells you that at some time some people valued it at X, nothing more.

8. Understanding accounts is imho important, but I would say that, accountancy is how I earn a living. But it is helpful to be able to read published accounts (forget the five line summaries on your brokers site, delve deep)

9. Always be prepared to cut your losses, see 4 above. Be careful of falling knives, if the market has priced downward it may have good reason, ensure you understand why it has taken the view it has.

10. Despite fundamentals, P/E, Gordon Models, etc, always remember that the term profit is a vague concept, how/when an entity decides it has made a profit whilst subject to accounting regulation, is not exact. So when you look at the company with reported earnings and profits over 3-5 years dig into its cashflows, these are far more difficult to massage.

There are a loads of other things to look for, study, read, delve into accounts, look at RNS stories, use bulletin boards but with great care, watch and observe to decide who seems to talk sense and who may have other motives, watching posters from a distance over time can educate your senses before spending any money.

Also maybe concentrate on particular companies or sectors, get to understand particular markets; analysts cover a niche for good reason, it is hard to cover everything, so you ought to do likewise.

Re my own credentials, I am old (a parent) have been investing for over 20 years, the last 8 with serious money (one of my pensions now a SIPP)

You will make mistakes, you will maybe get a ten bagger (I have had one, 3.5p went to 75p, I started selling between about 35p to 45p, so far too early with hindsight, but felt better when it fell back to 3p later-Beowulf-do not touch it, not for widows and orphans)

(Original post by DJKL)
No it is not, sports gambling is a win/lose wager, and with horse racing you do not even get to keep some of the manure.

The stockmarket (excepting punts in the short term ) is a long play.

My criteria (except for the odd small punt)

1. Buy stocks you will be happy to hold for a minimum five years, you may not intend a five year hold but buy those that if the price moves against you will not make you uncomfortable. The stock paying a dividend helps, but high yields are not the be all and end all, a very high yield can be telling you something. Do look at dividend cover and beware companies that every year have vast exceptionals that significantly impact difference between basic EPS and adjusted EPS, if every year they are miles apart do much more digging.

2. Remember that the norm is you never lose all your money, unlike betting, usually you can exit with some of your stake returned. If you use stop losses you can mitigate the downside but you need a wide margin re volatile stocks to avoid being constantly auto sold.

3.Moving your stop loss up if the price has increased is a good way to protect some of your gains.

4. Never fall in love with a share, it is really easy to do, if you do fall in love not penny/aim stocks, they can break your heart. I have a running love affair with Shell but it is a big beast with a long dividend record, I probably always hold some as a core and buy extra if I think it is undervalued (the minus 2% this morning was such an event, it was in profit by close)

5. Spread risk, very tricky if you have limited stake, you do not want all eggs in one basket. If very restricted re money/transaction costs will be an issue, consider Investment Trusts as slow burners. I do not like unit trusts but that is possibly in the main prejudice (except re property, they are dangerous with illiquid assets, as we are currently seeing) ITs also good way to get exposure into foreign markets etc, I use them for this purpose.

6.Be careful in current market, it is very difficult to predict with the current macroeconomics/ political events (banks, property, exchange risk, contagion issues etc abound) There are very few 100% certs re economies but you do need to keep an eye on macroeconomic news and formulate what might happen if x happens-in my case, despite some study at university, I still misread market signals, so caveat emptor; remember markets can be irrational for quite a long time. (dotcom boom)

7. Never believe that because a share was once priced at X it can retest that figure if it has fallen, a past price merely tells you that at some time some people valued it at X, nothing more.

8. Understanding accounts is imho important, but I would say that, accountancy is how I earn a living. But it is helpful to be able to read published accounts (forget the five line summaries on your brokers site, delve deep)

9. Always be prepared to cut your losses, see 4 above. Be careful of falling knives, if the market has priced downward it may have good reason, ensure you understand why it has taken the view it has.

10. Despite fundamentals, P/E, Gordon Models, etc, always remember that the term profit is a vague concept, how/when an entity decides it has made a profit whilst subject to accounting regulation, is not exact. So when you look at the company with reported earnings and profits over 3-5 years dig into its cashflows, these are far more difficult to massage.

There are a loads of other things to look for, study, read, delve into accounts, look at RNS stories, use bulletin boards but with great care, watch and observe to decide who seems to talk sense and who may have other motives, watching posters from a distance over time can educate your senses before spending any money.

Also maybe concentrate on particular companies or sectors, get to understand particular markets; analysts cover a niche for good reason, it is hard to cover everything, so you ought to do likewise.

Re my own credentials, I am old (a parent) have been investing for over 20 years, the last 8 with serious money (one of my pensions now a SIPP)

You will make mistakes, you will maybe get a ten bagger (I have had one, 3.5p went to 75p, I started selling between about 35p to 45p, so far too early with hindsight, but felt better when it fell back to 3p later-Beowulf-do not touch it, not for widows and orphans)

Anyway good luck.

How much money do you have in the markets? And what does your portfolio look like? 3.5p to 75p....wow, that is like winning the lottery....this is why I have a love hate relationship with speculation!

(Original post by john2054)
The primary reason why i using this system, is to improve my insight in to the market. Making some money would be nice, but if i can simply teach myself how to make a positive turnover on most days i trade, that is my goal.

.

I would caution against trying to prove anything on the markets, they're fickle things and will go from a bull to a bear on the flip of a coin.

(Original post by Jonsmith98)
Go long term, get all your savings and put them into a company that is going to perform well over the next few years, anything less is just a bad as going ladbrookes and putting money on a horse.

I'd disagree with that one, bluechip shares whilst on average are safe arent really money spinners and they are by no means immune take BPs share crash, property and building firms when the crunch hit and any pension pot thanks to brexit.

(Original post by Napp)
I would caution against trying to prove anything on the markets, they're fickle things and will go from a bull to a bear on the flip of a coin.

I'd disagree with that one, bluechip shares whilst on average are safe arent really money spinners and they are by no means immune take BPs share crash, property and building firms when the crunch hit and any pension pot thanks to brexit.

That's why you buy blue chips when they are "cheap", essentially undervalued. This also pushes up the dividend yield which helps your cause. Even if a blue chip crashes, you have bought it at such a great price and collected so much (hopefully increasing) dividend, it won't matter.

Plus if the crash is an overeaction, which it usually is with these markets, the share price should recover quite a bit over time if you sit tight. Unless the company is in financial distress, there is no justification is maintaining a "Persimmon" style post brexit price.

Persimmon and Legal and General look great buys right now, especially Legal and General. Consistent increasing dividend, and stock is undervalued.

(Original post by fg45344)
How much money do you have in the markets? And what does your portfolio look like? 3.5p to 75p....wow, that is like winning the lottery....this is why I have a love hate relationship with speculation!

Just over £200k that I manage in a SIPP plus a Life Rent Trust with about £60k in ITs (buy and forget funds with reasonable div yields, may run for 20 more years), but that is not mine, it was left by my father for his grandchildren to inherit eventually.

We do have other pensions/savings but these get managed (mismanaged) by the pros, and one is a final salary so should be safe as houses; whilst risk taking is sort of okay when young when older there are less years left to recover from mistakes, so I want to be sure if I screw up I can still retire.

Not all equal weight, more risky are smaller holdings, but currently hold:

Aviva,(may just be a punt-wait and see mode)
BHP,
BP,
City of London Investment (CILG),
Glaxo
HSBC
Interserve (do not rec this one, a punt as bombed out price)
Legal and General,(may just be a punt-wait and see mode)
Rio,
Shell.

This is not what I held pre referendum, I went 50% cash week before, I sold European ITs I held plus more UK/EU facing stocks. Normally I am more stable and hold for longer periods, this last week or so I have been in and out far more.

In main I am currently more confident re stocks earning in dollars and am except for the punts trying to avoid UK/EU centered stocks. I like dividends and holes in the ground (minerals/oil) I have a long term faith in Asia/wider world and less re Europe/UK . I think dollar pound will keep drifting vis a vis dollar, which pushes Shell etc up in sterling terms, until we get someone manning the helm of UK plc, so if Conservatives wait until September nearly two more months, if they accelerate maybe less. But I could be wrong, underlying exchange may be stronger than I think, as I said, economics-not my strong suit.

Areas that tempt me at present are builders and our banks, but fear is at present keeping me away, I did day trade Barclays and HBOS last week, but very small profit on one and small loss on other, I think with the pair about £100 ahead so maybe not worth the risk.

Except HSBC which is a big beast banks scare me, I do not understand their accounts.

Areas that repel me at present are UK retail.

Happy to chat re these but I never recommend my picks to anyone, I can and do lose money on occasion,(some little oil stocks in the past make me cringe, I blew £10k on one a few years ago)

(Original post by DJKL)
Just over £200k that I manage in a SIPP plus a Life Rent Trust with about £60k in ITs (buy and forget funds with reasonable div yields, may run for 20 more years), but that is not mine, it was left by my father for his grandchildren to inherit eventually.

We do have other pensions/savings but these get managed (mismanaged) by the pros, and one is a final salary so should be safe as houses; whilst risk taking is sort of okay when young when older there are less years left to recover from mistakes, so I want to be sure if I screw up I can still retire.

Not all equal weight, more risky are smaller holdings, but currently hold:

Aviva,(may just be a punt-wait and see mode)
BHP,
BP,
City of London Investment (CILG),
Glaxo
HSBC
Interserve (do not rec this one, a punt as bombed out price)
Legal and General,(may just be a punt-wait and see mode)
Rio,
Shell.

This is not what I held pre referendum, I went 50% cash week before, I sold European ITs I held plus more UK/EU facing stocks. Normally I am more stable and hold for longer periods, this last week or so I have been in and out far more.

In main I am currently more confident re stocks earning in dollars and am except for the punts trying to avoid UK/EU centered stocks. I like dividends and holes in the ground (minerals/oil) I have a long term faith in Asia/wider world and less re Europe/UK . I think dollar pound will keep drifting vis a vis dollar, which pushes Shell etc up in sterling terms, until we get someone manning the helm of UK plc, so if Conservatives wait until September nearly two more months, if they accelerate maybe less. But I could be wrong, underlying exchange may be stronger than I think, as I said, economics-not my strong suit.

Areas that tempt me at present are builders and our banks, but fear is at present keeping me away, I did day trade Barclays and HBOS last week, but very small profit on one and small loss on other, I think with the pair about £100 ahead so maybe not worth the risk.

Except HSBC which is a big beast banks scare me, I do not understand their accounts.

Areas that repel me at present are UK retail.

Happy to chat re these but I never recommend my picks to anyone, I can and do lose money on occasion,(some little oil stocks in the past make me cringe, I blew £10k on one a few years ago)

You seem quite the professional, my dad has a friend called Jim which reminds me of you. He may not have the economics background, but Jim has managed to buy BT shares at 70p and they are currently trading at around 390p. He put a good £10k in BT, so a wonderful return so far. He also gets all these wonderful tips from the city and no doubt those stocks explode the day after, but these stocks are more mid cap or lower, nothing blue chip.

Looking at your stock picks you look like a steady dividend man, which I like. Nothing like having the certainty of having steady income. I was eyeing up Interserve this week, their price has crashed a lot and their dividends look stableish. There must be an underlying problem somewhere for the share price to remain so low, the financials need to be checked. But I find when the market smells fear and doesn't see anything materialise, the share price pushes back up. I think that might have happened with Interserve, it's yielding nearly 10% in dividend!

This is the best time to buy those mining stocks/oil stocks...well we just missed the optimum time. When I saw BHP around 550p, I thought why is my dad not buying it (he has more capital than me clearly). He has around £120K in stocks the last time I checked....compared to my more manageable £14K. Though I did get BP at a bargain for 361p.

Right now Persimmon looks very tempting. I just bought Legal and General for 175p a few days ago. I saw a massive drop and went in for the buy, but then it dropped more, predicting the bottom is a pain. But I think the only way is up now unless we get something stupid in the news. It will hit resistance around 220p, no way Legal and General shoud be trading around 2013 levels....it just screams a buy.

Banks are super cheap right now, but Banks have been useless after the financial crash, the low interest rates makes them crippled. I still think Banks are useless, if you want a punt, go for them, but they are not a buy and hold. Just a speculation bet.

(Original post by fg45344)
That's why you buy blue chips when they are "cheap", essentially undervalued. This also pushes up the dividend yield which helps your cause. Even if a blue chip crashes, you have bought it at such a great price and collected so much (hopefully increasing) dividend, it won't matter.

Plus if the crash is an overeaction, which it usually is with these markets, the share price should recover quite a bit over time if you sit tight. Unless the company is in financial distress, there is no justification is maintaining a "Persimmon" style post brexit price.

Persimmon and Legal and General look great buys right now, especially Legal and General. Consistent increasing dividend, and stock is undervalued.

You may be right with L & G, I think they have limited say Italian funds etc on the books (petrified of Italian banking collapse) so may be reasonably safe.

Persimmon and housebuilders are trickier for me- how the housing market reacts re Brexit will take time to be clear, new builds need a stable mortgage market and confidence, to date some stories of price cuts in London but less so elsewhere. Given housebuilding works on reasonably tight margins (I work in property) slack demand, rising materials costs where imported, could squeeze. I have not looked at them in detail yet but may get time over the weekend.

(Original post by fg45344)
You seem quite the professional, my dad has a friend called Jim which reminds me of you. He may not have the economics background, but Jim has managed to buy BT shares at 70p and they are currently trading at around 390p. He put a good £10k in BT, so a wonderful return so far. He also gets all these wonderful tips from the city and no doubt those stocks explode the day after, but these stocks are more mid cap or lower, nothing blue chip.

Looking at your stock picks you look like a steady dividend man, which I like. Nothing like having the certainty of having steady income. I was eyeing up Interserve this week, their price has crashed a lot and their dividends look stableish. There must be an underlying problem somewhere for the share price to remain so low, the financials need to be checked. But I find when the market smells fear and doesn't see anything materialise, the share price pushes back up. I think that might have happened with Interserve, it's yielding nearly 10% in dividend!

This is the best time to buy those mining stocks/oil stocks...well we just missed the optimum time. When I saw BHP around 550p, I thought why is my dad not buying it (he has more capital than me clearly). He has around £120K in stocks the last time I checked....compared to my more manageable £14K. Though I did get BP at a bargain for 361p.

Right now Persimmon looks very tempting. I just bought Legal and General for 175p a few days ago. I saw a massive drop and went in for the buy, but then it dropped more, predicting the bottom is a pain. But I think the only way is up now unless we get something stupid in the news. It will hit resistance around 220p, no way Legal and General shoud be trading around 2013 levels....it just screams a buy.

Banks are super cheap right now, but Banks have been useless after the financial crash, the low interest rates makes them crippled. I still think Banks are useless, if you want a punt, go for them, but they are not a buy and hold. Just a speculation bet.

Interserve screwed up big style in Glasgow re a gas plant, £70m provision. The catch is they were not open and honest early enough, you do not in construction just find a £70m hole, jobs are monitored as they progress, so big black mark and market does not trust. However my own view is they got caught in the contagion and pushed down too far, they have fallen over a long time, hence the punt, but it is a punt.

Of the UK banks, RBOS to me is avoid, Barclays not sure, I think HBOS may be cleaner, but not for the faint hearted.

(Original post by DJKL)
Interserve screwed up big style in Glasgow re a gas plant, £70m provision. The catch is they were not open and honest early enough, you do not in construction just find a £70m hole, jobs are monitored as they progress, so big black mark and market does not trust. However my own view is they got caught in the contagion and pushed down too far, they have fallen over a long time, hence the punt, but it is a punt.

Of the UK banks, RBOS to me is avoid, Barclays not sure, I think HBOS may be cleaner, but not for the faint hearted.

I think it's very rare for a FTSE 250 company to be yielding over 10%, it just screams a buy. Either something is very wrong or the market is just being stupid and Interserve will have doubled in value over the next few months.

But it does make me think a bit, I mean I took a very big gamble buying Eros International Bonds 6.5% at something like £63 on the £100 nominal, so the yield is like 9.5-10%. The maturity is 2021 and I don't see the bond price rising to par till like late 2017/2018. So I have to hold.

Problem is I chase yield too much, like even for that extra few percent of yield I will be tempted. Companies like Interserve and Persimmon tempt me. Maybe it's cos I think they are too big to fall.

RBOS has always been a failure in my eyes and Barclays is no better. If you want bank, that's a big if, stick to the asian giants (HSBC) or the american banks (JP Morgan, Goldman Sachs). Though if you put a gun to my head and said you had to buy a bank, I would go with JP Morgan, though they are equally as bad as each other for me.

(Original post by fg45344)
You seem quite the professional, my dad has a friend called Jim which reminds me of you. He may not have the economics background, but Jim has managed to buy BT shares at 70p and they are currently trading at around 390p. He put a good £10k in BT, so a wonderful return so far. He also gets all these wonderful tips from the city and no doubt those stocks explode the day after, but these stocks are more mid cap or lower, nothing blue chip.

Looking at your stock picks you look like a steady dividend man, which I like. Nothing like having the certainty of having steady income. I was eyeing up Interserve this week, their price has crashed a lot and their dividends look stableish. There must be an underlying problem somewhere for the share price to remain so low, the financials need to be checked. But I find when the market smells fear and doesn't see anything materialise, the share price pushes back up. I think that might have happened with Interserve, it's yielding nearly 10% in dividend!

This is the best time to buy those mining stocks/oil stocks...well we just missed the optimum time. When I saw BHP around 550p, I thought why is my dad not buying it (he has more capital than me clearly). He has around £120K in stocks the last time I checked....compared to my more manageable £14K. Though I did get BP at a bargain for 361p.

Right now Persimmon looks very tempting. I just bought Legal and General for 175p a few days ago. I saw a massive drop and went in for the buy, but then it dropped more, predicting the bottom is a pain. But I think the only way is up now unless we get something stupid in the news. It will hit resistance around 220p, no way Legal and General shoud be trading around 2013 levels....it just screams a buy.

Banks are super cheap right now, but Banks have been useless after the financial crash, the low interest rates makes them crippled. I still think Banks are useless, if you want a punt, go for them, but they are not a buy and hold. Just a speculation bet.

The reason for my dividend fetish is when I do draw the pension I intend to take fuller monies from others but just dividends from the SIPP, leaving fund intact, the plan being to pass residual to my children after my wife and I are no more, however no doubt pension rules will have changed 20 times by the time that all happens so difficult to predict.

If allowed to mention here, Motley Fool High Yield Practical is worth a read, they get a bit cult like re particular "rules" re the investment approach but some great analysis re the compounding impact of dividends, I learned a lot from there and some really good investors do post-if bored drop in, I post there, though not that often these days, as Charlottesquare, but some of them are seriously well informed.

(Original post by fg45344)
I think it's very rare for a FTSE 250 company to be yielding over 10%, it just screams a buy. Either something is very wrong or the market is just being stupid and Interserve will have doubled in value over the next few months.

But it does make me think a bit, I mean I took a very big gamble buying Eros International Bonds 6.5% at something like £63 on the £100 nominal, so the yield is like 9.5-10%. The maturity is 2021 and I don't see the bond price rising to par till like late 2017/2018. So I have to hold.

Problem is I chase yield too much, like even for that extra few percent of yield I will be tempted. Companies like Interserve and Persimmon tempt me. Maybe it's cos I think they are too big to fall.

RBOS has always been a failure in my eyes and Barclays is no better. If you want bank, that's a big if, stick to the asian giants (HSBC) or the american banks (JP Morgan, Goldman Sachs). Though if you put a gun to my head and said you had to buy a bank, I would go with JP Morgan, though they are equally as bad as each other for me.

Do remember, dividends can be cut and if cashflow issues it can be one of the first things to go. Why I like Shell, ridiculous number of years without a divi cut.

(Original post by DJKL)
The reason for my dividend fetish is when I do draw the pension I intend to take fuller monies from others but just dividends from the SIPP, leaving fund intact, the plan being to pass residual to my children after my wife and I are no more, however no doubt pension rules will have changed 20 times by the time that all happens so difficult to predict.

If allowed to mention here, Motley Fool High Yield Practical is worth a read, they get a bit cult like re particular "rules" re the investment approach but some great analysis re the compounding impact of dividends, I learned a lot from there and some really good investors do post-if bored drop in, I post there, though not that often these days, as Charlottesquare, but some of them are seriously well informed.

I always think reinvesting dividends is the way forward, then you can pick out star buys. As the market evolves, certain stocks become star buys and then fade away.

Like in early 2016, the oil and mining giants were star buys. They won't be again for a long time, oil looks like it will keep rising, I don't see oil ever getting to $20 a barrel again. When the financial crash happened in 2008, the banks took the biggest hit. They were the ones to buy in 2008, but with low interest rates they never got round to making money, so just a speculative bet I guess.

Compounding is a miracle, that's why you always reinvest as much as you can.